The Forest, The Trees

"I fear that we may have already committed more physical resources to the baby-boom generation in its retirement years than our economy has the capacity to deliver," says Greenspan. This is a classic example of Greenspanian double-speak horseshit. We have the most productive economy in the history of the world, creating wealth at a phenomenal rate. It has the "capacity to deliver" funding for two simultaneous expensive foreign military adventures; billions in reconstruction aid to the victims of recent natural disasters; another expectation-busting holiday spending spree; Alaskan bridges to nowhere™; multi-million dollar bonuses for Wall Street executives; etc, etc, etc. On what reasonable grounds could Greenspan be making this outlandish assertion?

There are no "physical resources" we have committed that we would be unable to deliver, unless shifting the priorities of our wealth allocation is off the table.

Greenspan Again Sounds Alarm on Budget Deficit

WASHINGTON -- The U.S. economy is expanding at a "reasonably good pace" heading into 2006, but the budget deficit will worsen significantly unless steps are taken to control entitlement spending, particularly on health care, Federal Reserve Chairman Alan Greenspan said Friday.

"Our budget position will substantially worsen in the coming years unless major deficit-reducing actions are taken," Mr. Greenspan cautioned in prepared remarks delivered via videotape at a policy forum at the Philadelphia Federal Reserve Bank.

Mr. Greenspan reiterated his call for Congress to restore federal spending caps, saying the necessary choices will be "especially difficult" to implement unless there are procedural restraints on the budget-making process. But he cautioned that changing the budget rules won't solve the looming budget crisis when baby boomers begin retiring in 2008.

"The fundamental fiscal issue is the need to make difficult choices among budget priorities, and this need is becoming ever more pressing in light of the unprecedented number of individuals approaching retirement age," he said.

As long as health-care costs continue to grow faster than the economy as a whole, "they will exert budget pressures that seem increasingly likely to make current fiscal policy unsustainable," Mr. Greenspan said.

Mr. Greenspan cited government estimates that entitlement spending, which currently accounts for 8% of gross domestic product, will consume 13% by 2030. "I fear that we may have already committed more physical resources to the baby-boom generation in its retirement years than our economy has the capacity to deliver," he said.

Mr. Greenspan observed that higher productivity could alleviate some of the burden on entitlement programs, though he cautioned that it is "unlikely to represent more than part of the answer." Higher productivity could actually put added pressure on the benefits side of entitlement programs, particularly Social Security, he said.

"Because initial Social Security benefits are heavily influenced by economywide wages, faster productivity growth will, with a lag, also raise benefits under current law," he said.